TiVo Wins Ruling in Comcast Royalty Fight at Trade Agency

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(Bloomberg) -- TiVo Corp. won a case on Thursday at a U.S. trade agency, the latest ruling in a long slog with Comcast Corp. over royalties on television set-top boxes.

Comcast infringes a patent owned by TiVo’s Rovi for a content search function, the U.S. International Trade Commission said in a notice on its website. The commission granted TiVo’s request for an order that Comcast can’t import imports television set-top boxes with the feature.

The decision is the latest in a legal saga that began when a licensing agreement between the two companies expired in March 2016. Rovi, a maker of program guides, contends Comcast has continued to use its inventions without paying; Comcast says Rovi wants too much for outdated ideas, and has described Rovi’s patent portfolio as “increasingly obsolete.”

The companies disagreed about the importance of the decision.

“This is yet another win for TiVo,” said Arvin Patel, executive vice president and chief intellectual property officer at Rovi. “Today’s final determination in our second ITC case against Comcast reaffirms that Comcast’s X1 entertainment experience continues to violate TiVo’s patent rights.

Patel called Comcast a “serial violator of TiVo’s patents.”

“TiVo will continue to litigate until Comcast enters into a fair licensing agreement with TiVo and pays us what it owes,” he said.

Comcast accused TiVo of “once again misleading the public about” its litigation with Comcast.

“Today’s order will have no impact on either our customers or our business,” Comcast said in a statement. “Rovi has admitted -- and the ITC ruled -- that our current system is non-infringing since we previously removed the insignificant highlighting feature related to the patent addressed in this ruling.”

War of Attrition

Each company is engaged in war of attrition against the other -- TiVo by forcing Comcast to remove features from its X1 set-top boxes that customers may want, and Comcast by petitioning the U.S. Patent and Trademark Office to cancel TiVo patents in the disputes.

“Incremental patent validity/infringement wins by TiVo in the ITC will not only diminish the value of the Comcast X1 platform in the eyes of pay-TV subscribers within an increasingly competitive environment, but could move Comcast closer to a settlement/license with TiVo,” Eric Wold, an analyst with B. Riley FBR, said in a Dec. 11 note to clients.

ITC Judge MaryJoan McNamara in June found that Comcast had infringed one valid patent for what’s known as an “overloaded key searching,” where the buttons are for both numbers and letters. By pushing the numbers, the box can predict which letters -- and eventually what word -- the user wants when conducting a search for television content.

Conservative Backing

A second patent, for user control over storage options, was found invalid. A third, for accessing archived programs in the on-demand library, was not infringed, the judge said. The commission let those findings stand.

TiVo has gotten the support of conservative groups and members of Congress from both sides of the aisle. Retiring Republican Congressman Peter King of New York said in a September letter to the agency that “if Comcast were to simply pay the licensing fees that its competitors pay, it would not have any trouble providing the technology to its customers.” Democratic Congresswoman Jackie Speier of California made similar comments in her letter to the commission.

This is the second of three cases Rovi lodged against Comcast at the Washington trade agency. In the first case, the commission said Comcast set-top boxes infringe Rovi patents, which have since expired, for remote access to program guide functions. The agency ordered an import ban of Comcast boxes with the feature, so Comcast removed the feature and kept shipping the devices from a manufacturing plant in Asia.

An appeals court on March 2 upheld Tivo’s win in that case. The ruling considered the agency’s authority to halt imports of products that infringe patents after they enter the U.S. market, so implicated all three cases Tivo had filed.

The third case against Comcast targets cloud and digital video recording systems. McNamara also has been assigned to that case. A trial was held in January, and the judge is scheduled to release her results in June.

Comcast has responded by lodging petitions asking the Patent Trial and Appeal Board to cancel the patents. It won decisions invalidating patents from the first case. A final decision in the review of the search function patent in this case is expected in July.

In late U.S. trading Tivo was little changed at $6.55 a share, and Comcast was up 1% at $36.11.

The case is In the Matter of Certain Digital Video Receivers and Related Hardware, 337-1103, U.S. International Trade Commission (Washington).

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